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Impact of oil price changes on Turkey’s exports

Author

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  • Olcay Y. Çulha
  • M. Utku Özmen
  • Erdal Yılmaz

Abstract

Substantial decline in oil prices observed since the second half of 2014 has brought forward discussions on the impact of oil prices on the external balance. This decline is expected to shift real income from oil exporter countries to oil importer countries. In this context, we study the effect of change in oil prices on Turkey’s exports taking into account the fact that Turkey’s export to oil exporting countries has approximately one-third share in total exports, while export to oil importing countries has a share of two-thirds. At the first step, we analyse the effect of oil prices on economic growth of trade partners of Turkey, where countries are grouped according to their net oil export position. We find that the effect of oil prices on different country groups’ growth is asymmetric. In the second stage, for two groups of countries, we estimate growth-export elasticity through Turkey’s export demand function. Finally, we calculate the net effect of oil prices on exports considering different income effects caused by oil price change on each country groups. Results indicate that the net effect of oil prices on the exports is limited given the current export shares.

Suggested Citation

  • Olcay Y. Çulha & M. Utku Özmen & Erdal Yılmaz, 2016. "Impact of oil price changes on Turkey’s exports," Applied Economics Letters, Taylor & Francis Journals, vol. 23(9), pages 637-641, June.
    • Handle: RePEc:taf:apeclt:v:23:y:2016:i:9:p:637-641
    DOI: 10.1080/13504851.2015.1095993
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    References listed on IDEAS

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    1. Khalid A. Alkhathlan, 2013. "Contribution of oil in economic growth of Saudi Arabia," Applied Economics Letters, Taylor & Francis Journals, vol. 20(4), pages 343-348, March.
    2. John Baffes & M. Ayhan Kose & Franziska Ohnsorge & Marc Stocker, 2015. "The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses," Policy Research Notes (PRNs) 94725, The World Bank.
    3. Mr. Tobias N. Rasmussen & Agustin Roitman, 2011. "Oil Shocks in a Global Perspective: Are they Really That Bad?," IMF Working Papers 2011/194, International Monetary Fund.
    4. Bilin Neyaptı & Fatma Taskın & Murat Ungor, 2007. "Has European Customs Union Agreement really affected Turkey's trade?," Applied Economics, Taylor & Francis Journals, vol. 39(16), pages 2121-2132.
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    Cited by:

    1. Umar Bala & Lee Chin & Ghulam Mustafa, 2022. "Threshold Effects of Oil Price and Oil Export on Trade Balance in Africa," Journal of Economic Impact, Science Impact Publishers, vol. 4(1), pages 14-27.
    2. Mehmet Dikkaya & Bayram Veli Doyar & Ozgur Kanbir, "undated". "The Effects Of Oil Prices On Turkeys Foreign Trade Relations To Azerbaijan," Review of Socio - Economic Perspectives 201833, Reviewsep.

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